The marked decline in retail sales that easily reversed September's modest gain is likely to fuel speculation whether private consumption can continue to remain a strong pillar of domestic growth.

On a year-on-year basis, sales were down 0.8 percent, falling for a fourth consecutive month. This was sharper than expectations for a 0.3 percent decline. Retail sales of food products declined 0.5 percent year-on-year, while non-food retailing dropped 1.8 percent.

Data published by the Federal Labor Agency yesterday showed that unemployment in Germany rose for an eight consecutive month in November.

A survey by GfK showed this week that German income expectations and willingness to purchase big ticket items have declined due to weak economic growth and concerns over the potential impact of a further escalation of the debt crisis.

The report forecasts a modest fall in consumer confidence in December. The survey also found that unemployment is unlikely to decrease further in comparison with the previous year.

Germany's economic growth slowed to 0.2 percent in the third quarter from 0.3 percent in the second quarter. The government forecast the economy to expand 1 percent in 2013 following 0.8 percent GDP growth this year.

The European Commission estimates a 0.8 percent expansion for the economy both in 2012 and 2013.

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